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Why Cryptocurrency Exchanges Are Still Profitable Regardless Of Market Struggles

Samantha Mitchell



Why Cryptocurrency Exchanges Are Still Profitable Regardless Of Market Struggles

Although the popularity of Cryptocurrency is growing every day, most coins have been unable to reach the prices they recorded towards the end of 2017 and the start of this year. However, exchanges are still making billions in revenue despite these challenges. Furthermore, in countries such as South Korea, the institutions are now running most of these exchanges.

Exchanges Are Making Billions


Recently, some exchanges have made public their revenue, with some recording more profits that even well-established traditional institutions such as banks. Most of these exchanges make their profit from the transaction and withdrawal fees. Moreover, project leaders have to part with some cash to list their coins on these exchanges. By the end of this year, Coinbase is expected to collect over $1.3 billion in revenue. There is no other exchange that is larger than this fiat-to-Crypto platform.

In January alone, Binance made a profit of $200 million. This profit is comparable to that made by Deutsche Bank, the largest financial institution in Germany. In South Korea, Upbit and Bithumb exchanges have reported monthly revenue of $100 million this year. Jung Yoon-ho, a researcher at Yoojjin Investment observed that Bithumb has a daily trading volume of $2.5 billion. He said the exchange who be making as much as $2.5 million per day.

How Exchanges Are Making Money

One must use an exchange to buy or sell Cryptocurrencies. Some experts have tried to dig deeper to establish how these exchanges are raking in billions. Recently, Bloomberg claimed to have obtained some documents that showed that Coinbase is projected to make around $1.3 billion per year. According to the publication, most of the company’s profit is generated from the commission on trades. Besides, the company has its own Crypto holdings, which also help to boost the profits.

Despite the huge profits reported by most of these exchanges, their revenue has been affected by the current market struggles. In South Korea, for instance, a decline in the Crypto market has been reported. Some experts predict that in the last 10 months, Bithumb has seen its monthly revenue drop to around $60 to $70 million from about $100 million.

Binance recently said that it will donate all the revenue made from coin listing. The government said that it will fund transparent initiatives by authoritative groups such as the UN. According to Changpeng Zhao, Binance CEO, such donations will be made in Crypto to help such organizations address health, hunger, and poverty among other social problems. The transparency that will come with the use of Cryptocurrencies will help these charity organizations achieve their goal faster.

Institutions In The Crypto Sector

The number of institutions and conglomerates joining the lucrative Crypto market has been growing every day. In South Korea, for instance, these institutions now operate most of the major exchanges in the country. Nexon, Shinhan Bank, and Kakao are some of the conglomerates that have joined the sector. The move is expected to bring many benefits to the sector. Given that such businesses would not like to tarnish their brands, they will boost security on the exchanges to prevent any loss of funds.

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